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Extra resources for A Lesson In French Inflation (1959)

Example text

The practice of the Fourth Republic, to spend first then look for means to fill the hole in the budget, is abandoned. 8. A key feature of fiscal reform is, or will be, the simplification and decimation of the overgrown bureaucracy. Whenever a problem arose, the French Welfare State's answer was a new official agency, usually overlapping and conflicting with older ones. The consequent inflation of the bureaucratic apparatus cannot be cured overnight. It can be expected to take years before the full benefit of administrative deflation will accrue to the harassed public and the Treasury.

The low-Income consumers would have been deprived of fats without a butter price subsidy. The case illustrates, also, the well-known fact that each subsidy, or direct control, tends to germinate others. 2 In mid-1914, deposits In French savings banks were estimated at 13 billion gold francs. By mid-1958 they should have grown to 260 billion francs, given the infIation-coefficient of 200, even if no new deposits had been added. But the total amount at the latter date was barely 190 billion 'francs.

For De Gaulle, convertibility is a remote goal, genuine budget balanCing perhaps even more so. Stabilizing the budget deficit and the external value of the franc are the prime agenda. At the same time they are means to an overriding objective. What is now a chief objective, was scarcely even problematiC thirty-odd years ago: the restoration of the price mechanism. By a myriad of devious techniques, the French price system and income distributiqn had been effectively distorted, until even the semblance of competitive markets had almost vanished.

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